According to the IPD Index, retail produced an annual return of 6.6% in 2000, and CCRE is forecasting that 2001 will be even worse at 5.4%. This poor performance has led investors to abandon the sector. Prime yields are now up to 5.5%, and CCRE partner Mark Wills-Williams expects them to weaken further to 6% by the end of this year. And the premium paid for 'superprime' pitches during the late 1990s now no longer exists.

But with like for like retail sales growing at an annualised 9.3% in May, there are signs that retailers are beginning to expand again, and CCRE forecasts that retail will be the best performing property sector in 2002, with a total return of 11.7%.

However, there is a different story to be told out-of-town where supply is restricted by tight planning controls. CCRE partner Edward Farrer pointed out: 'B&Q's ability to open 24 stores in 12 months, more than 2 million sf of space, in the current difficult planning environment, makes a mockery of some pundits' historic pipeline figures.'

Fashion retailers are increasingly moving onto out-of-town sites, and this new competition for space is driving up rents. For example New Look paid £50 ($70) per sf in Cheshunt, Hertfordshire. The IPD Index showed a total return of 11.3% for out-of-town retail in 2000. CCRE is forecasting a dip to 10.4% this year, with a recovery to 12.4% in 2002.

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Retail